JPMorgan to exit pre-paid card business
10 January 2014 | 10213 views | 8
JPMorgan Chase says it plans to pull out of the pre-paid card business just a month after the bank confirmed that hackers had broken into its servers and put the personal information of around 465,000 cardholders at risk.
In a brief statement issued late Thursday, JPMorgan said it will "explore a full range of options for its pre-paid card business, including a sale".
The business includes all corporate, US public sector and electronic benefit transfer (EBT) programmes, as well as Health Savings Accounts (HSA).
Additionally, the firm said it will no longer solicit or accept any new prepaid card business.
In September, the bank discovered that Web servers used by its UCard Web site had been compromised. The affected cards were used by companies to pay employees and by government agencies to distribute benefits.
In the wake of the breach, the US state of Connecticut decided to suspend its debit card programme for paying out tax refunds, resorting to paper cheques. Explaining the move, tax commissioner Kevin Sullivan blasted the bank, declaring: "I am wildly unhappy with the level of customer service".
The decision to exit the business is understood to be directly linked to the breach, as well as growing regulatory scrutiny of the fees charged by banks for using pre-paid products.
Chase customers, including cardholders of Chase debit, credit, Chase Liquid and commercial cards, are not affected by the decision.